The Financial Upside of Being an Optimist

Executive Summary

A recent research study found that when it comes to money, optimists are more likely to make smart moves and reap the benefits. For example, 90% of optimists have put money aside for a major purchase, compared to 70% of pessimists. Nearly two thirds of optimists have started an emergency fund, while less than half of pessimists have. Optimists reported that they stressed about finances 145 fewer days each year as compared to pessimists. They also make more money and are more likely to be promoted. The good news is that optimism is just like a muscle, and you can build it. Start the day by practicing gratitude. This two-minute daily practice rewired elderly pessimists to become more optimistic after just two weeks. Send a two-minute email each day to someone new and different, praising or thanking them. Social connection is the greatest predictor of happiness, and it is strongly correlated with optimism. These small habits could help you take back 145 stress-free days each year, not to mention fuel your happiness and work success as well.

It’s hard to escape the fact that chronic stress is one of the greatest threats to well-being in modern times. In a report published by The National Institutes for Occupational Safety and Health, 75% of workers say they are more stressed than the previous generation, and 40% place themselves on the high end of the stress spectrum. In a large-scale study of more than 11,000 people, researcher Shawn Achor and I found that 91% of people had maladaptive responses to stress that exacerbated circumstances and decreased well-being. In the face of this mounting reality, some argue that chronic stress is a “modern day birthright.” It is not. Chronic stress is a trap we’ve fallen into — one that we can get out of with intentionality.

An antidote to chronic stress is cultivating an optimistic mindset — and it serves us well over the course of our careers. In a new study I conducted in partnership with Frost Bank, we found that when it comes to money, optimists are more likely to make smart moves and reap the benefits.

We surveyed more than 2,000 Americans, testing for optimism, financial health, and attitudes and behaviors around money, using scientifically validated measures such as the Life Orientation Test and the Consumer Financial Protection Bureau Well-Being Scale.

After controlling for wealth, income, skills, and other demographics to level the playing field, the data clearly showed that optimists were significantly more likely to experience better financial health than pessimists, and engage in healthier habits with their money. For instance, we found that 90% of optimists have put money aside for a major purchase, compared to 70% of pessimists. Nearly two thirds of optimists have started an emergency fund, while less than half of pessimists have. Additionally, optimists are more likely to seek out and follow advice from someone they trust. In my opinion, the most compelling finding was how optimists felt, reporting that they stressed about finances 145 fewer days each year as compared to pessimists.

Optimism is a lucrative investment beyond one’s finances. Optimists do better over the course of their careers as well. They make more money and are more likely to be promoted. Achor and I developed a scientifically-validated optimism scale to test professionals at hundreds of companies across industries, and we found that “Visionary Work Optimists” — those that are in the top quartile for optimism as compared to their peers — are 40% more likely to get a promotion over the next year, not to mention six times more likely to be highly engaged at work, and five times less likely to burnout than pessimists.

A landmark study by my former research partner Dr. Martin Seligman from the University of Pennsylvania found that optimistic sales professionals outsell their pessimistic counterparts by 56%. As a result of this study done at MetLife, the insurance giant changed its hiring practices to include a screening for optimism, which improved retention and saved the company tens of millions of dollars.

But thinking like an optimist isn’t all rosy. One study found that while most successful entrepreneurs will call themselves optimists, optimistic entrepreneurs earn 30% less than pessimistic ones on average. That might be because they are taking greater risks and failing more often. (That same study found that optimistic employees do earn more than pessimistic colleagues.) But studies highlighting the negative side of a more positive mindset are few.

Optimism sometimes gets a bad rap because people often connect it with Pollyanna and her rose-colored glasses ignoring reality. One time a manager told me during an upcoming restructuring at his company that the best way to help his team stay positive was to not talk about what was going on. You can imagine it was no surprise when a few months later I received word from his boss that he had been let go for mismanaging his department. Optimism does not mean ignoring reality. In our work, we define optimism as the expectation of good things to happen, and the belief that behavior matters, especially in the face of challenges. A rational optimist is able to see reality for what it is, while maintaining the belief that actions can improve the situation. This solution-focused mindset propels positive action. Rational pessimists also see what’s really happening; they just don’t believe there is much they can do about it. For pessimists, circumstances overwhelm. For optimists, mindset wins.

Optimism is a lucrative investment for professionals, which is why I’m on the road more than 120 days a year (with my family, including two kids under 5-years-old in tow — yes, I am an optimist!) to help employees assess and strengthen their optimism. It’s just like a muscle, and you can build it. Here are some of the same positive habits I share during my keynotes at organizations to help build optimism:

Focus on what’s working: Start the day by practicing gratitude. Instead of grabbing your phone first thing to check the headlines or your email, create a “media moat” and start your day by listing three things you’re grateful for, and why. This two-minute daily practice rewired elderly pessimists to become more optimistic after just two weeks.

Seek progress, not perfection: Don’t wait until you’ve perfected the plan. Whether you’re trying to switch roles at work or launch a new idea, waiting for perfection can be your greatest enemy. Set a meaningful goal, and take the smallest measurable step towards achieving that goal. That win will propel continued positive action as your brain gets a boost from perceiving progress.

Meaningfully connect with others: Send a two-minute email each day to someone new and different, praising or thanking them. This habit is my all-time favorite, because these notes often brighten the day of family members, colleagues, or friends, but they are also good for you. Your brain starts to more deeply recognize all the people who care about you. Social connection is the greatest predictor of happiness, and it is strongly correlated with optimism.

Consider testing your optimism before and after adopting these habits using the Success Scale. These small habits could help you take back 145 stress-free days each year, not to mention fuel your happiness and work success as well.

Michelle Gielan, a national CBS News anchor turned UPenn positive psychology researcher, is now the bestselling author of Broadcasting Happiness. She is partnered with Arianna Huffington to research how transformative stories fuel success.